Precious metals continue their price climb Wednesday morning, benefiting from safe-haven investment demand, inflation fears and a weakening U.S. dollar. Gold currently about $1,436 per ounce; silver near $34.75.

* "Gold rose to a seven-week high on Monday as spreading unrest in the Middle East underscored its appeal as a safe-haven asset, while silver and palladium prices hit historic highs on expectations for growing industrial demand. Bullion has risen for five straight sessions, its longest winning streak since September," reports Reuters.

* "U.S. consumer price data stoked growing worries over inflation, adding fuel to safe-haven buying due to flaring Middle East tensions. Bullion's gains sparked strong investment buying in silver, which rallied to a 31-year high, sending the gold-silver ratio to a near five-year low. Gold buying was underpinned after data showed U.S. core consumer prices rose 0.2 percent in January, the fastest pace in more than a year, indicating a long period of slowing inflation had run its course," reports Reuters.

* Attack by International Monetary Fund "could kill the U.S. Dollar and wreck America's economy," Says Monetary Expert: "The U.S. Dollar Is Dying a Death of a Thousand Cuts." -- Late last week the International Monetary Fund (IMF) called for replacing the U.S. Dollar as the world's Reserve Currency with its own exchange "money" called SDRs, Special Drawing Rights. "The IMF last week also proposed creating SDR Bonds, and repricing assets such as oil in SDRs," says Craig R. Smith, author and chairman of Swiss America. "These changes could end the dollar's supremacy as the world's Reserve Currency and force us to purchase SDRs before we could buy oil. This would overnight devalue the dollar worldwide and make gasoline and everything else we import much, much more expensive," ( Full story )

* Real World Inflation: Now and Later: "The CRB Index has nearly doubled just since 2009! The index tracks energy, grains, industrials, livestock, precious metals, and agriculturals. We haven't even begun to see the effects of these price increases yet because there is a time lag between cause and effect. Buy gold today and get out of mass-created depreciating paper dollars," reports GoldIRAs.

* "China is taking several initiatives to raise the country’s reserves in gold and silver in 2011 in an attempt to globalize the Yuan. The main strategy is to buy gold and silver reserves when prices of these precious metals fall. China, the largest producer of gold, had announced last year that it would considerably step up gold reserves in the next decade to the tune of 10,000 tons. Currently, the Chinese gold reserves stand less than 1200 tons," reports Commodity Online.

* "During [2011] the Year of the Golden Rabbit more than a billion Chinese around the world will think it both prudent and lucky to buy gold. This added demand is likely to push gold prices up dramatically worldwide for the next 12 months, a wave that wise investors can ride by buying gold now. Think of it as the safest, easiest and quickest way to 'invest' in and profit from what is happening in China," writes Swiss America Chairman Craig R. Smith.

* How Gold will Explode: "Precious metals have been in a steady bull market for almost 11 years. During most of that time, stocks and bonds have performed reasonably well. Thus, mainstream advisers and managers could avoid precious metals and still generate reasonable returns. If and when stocks and bonds enter a bear market it will be the first time they are in a bear market simultaneously since the 1970s. As the entire precious metals complex continues its upward climb, mainstream pundits and fund managers will be forced to buy in due to the other asset classes (stocks, bonds, real estate) being in bear markets. With a global allocation to Gold of only 1%, one can see clearly where things are headed. Institutional accumulation began in 2009 (e.g. Paulson, Einhorn) and we know that phase lasts at least a few years before a bull market gives birth to a bubble," WallStCheatSheet.

* Inflation is a Function of How You Measure It - WallStCheatSheet-- "Looking at inflation presently, it is high and rising around the world, and revealing itself through price spikes in certain goods precisely because over the last ten years there's been a run on paper currencies globally. The driver? The answer there is simple: the weak U.S. dollar. The end result is what it's always been: price spikes. Inflation – a decline in the value of money – is what it's always been... the U.S. economy will continue to suffer rising prices, and much worse, a continued flow of limited capital into the ground, and away from the innovators and entrepreneurs who’d be well-positioned to author our recovery absent extreme dollar weakness."

* The buck stops here? Virginia eyes switching off dollar - WND "Virginia state Delegate Robert G. Marshall has introduced legislation to study whether the Commonwealth should make the preparations now to switch suddenly to an alternative currency in the event of an implosion of the Federal Reserve System and the destruction of the dollar. The kind of study Marshall is proposing never has been popular among politicians who get elected and stay elected by making promises to the voters, usually with lofty price tags. On the other hand, a commodity-backed currency – a gold standard - forces governments to spend only as much money as its country has in gold and provides a self-regulating and stabilizing effect on the economy."

* Get Out of Your Dollar Assets Now! -KingWorldNews"The real news, the critically important news, centers around the US dollar. It's as if you are reading a report on a building you want to buy. The report tells you all about the heating system, the repairs to the roof, the condition of the wood floors, but the report leaves out the critical fact that the foundation of the house is crumbling. If the dollar collapses, every investment you own will be adversely affected -- your home, your stocks, your insurance policies, your bonds, your 401K -- everything that is denominated in dollars. The Russell advice -- swap your dollars for physical gold or CEF, GLD, or SGOL. In other words, do as China and Russia and many other nation are now doing -- get out of your dollar assets."

* Which currency is going to crash first?: "There are even many that believe that authorities at the highest level actually want the dollar, euro and yen to fail. Why? Well, many of the same individuals and groups that brought us NAFTA, the WTO, the IMF, the OECD and the World Bank believe that it would be absolutely wonderful for humanity if we could all have a single, united global currency. If we allow the globalists to push a truly global currency down our throats it will be another giant step towards the creation of a totalitarian one world system," reports PressTV.

* "Silver coin sales have been on a tear in recent months and can be used as an economic indicator to show a lack of confidence in the U.S. monetary policy, said Nicholas Colas, chief market strategist at ConvergEx. 'Silver coins have become the proxy for people's confidence and worry about the U.S. dollar. Gold's gotten so expensive that folks can’t afford it, and the mint is minting fewer fractional gold coins, so many people have migrated to silver,' Colas tells CNBC.

* Commodities Prices Are Hitting Your Wallet: "The prices of many commodities -- including corn, cotton, wheat, coffee, sugar, cocoa and soybeans -- surged last year as severe weather crippled some crops and demand from nations like China and India continued to explode. And the trend is expected to continue this year," reports WSJ.

Chinese yuan-upmanship - UK Guardian
"Chinese premier Hu Jintao has called the dollar-dominated international currency system 'the product of the past'. A recent poll by the Guardian asked readers, "Is Hu Jintao right that the era of dollar dominance of the global currency system is coming to an end?" 61% said YES. 38% said NO. So, almost two-thirds of readers are already expecting the dollar era to soon end. Brother, can you share a yuan?

* "The dollar won't survive. And when it begins to limp and cough badly, some investors may go to Chinese yuan or Swiss francs. Most will want to go to real money... the kind you can trust... the kind that never goes away... the ‘last man standing' in a monetary crisis - gold," writes Bill Bonner at DailyReckoning.

* China prez questions dollar's future: "Ahead of his visit to Washington this week Chinese President Hu Jintao called the present U.S. dollar-dominated currency system a "product of the past" and highlighted moves to turn the yuan into a global currency. Mr. Hu's veiled criticism of the Fed reflects widespread feelings among developing nations that U.S. interest-rate policy is devaluing the dollar, prompting flows of capital overseas and creating inflation elsewhere," reports WSJ.

* The incredible shrinking dollar -Marketwatch1.18.11 -- "Guess what? Your pocket has been picked. I don’t mean your wallet, or even its contents. What I am referring to is the buying power of the money it contains. The modern-day Fed has injected gobs of liquidity into the markets, which will turn into cash once the banks start lending. This will mean far more money in circulation than goods and services. This is a recipe for a new round of inflation if I ever saw one. Since wages are no longer indexed to inflation, rising prices will hurt people’s buying power, thus depressing consumer spending — the last thing this economy needs."

* Fate of U.S. Dollar and Economy May Be Decided This Week -CTDMedia1.17.11 -- "The fate of the U.S. Dollar and America's economic future will be on the table at Wednesday's (Jan. 19, 2011) White House State Dinner for visiting Chinese President Hu Jintao, warns Swiss America CEO Craig R. Smith, who contends that America's economy depends on China continuing to extend credit to the U.S. President Hu and other Chinese officials have criticized Federal Reserve Board Chairman Ben Bernanke's creation of $600 billion out of thin air by this coming July - a policy called Quantitative Easing Two, or QE2. "This means the U.S. can repay China with devalued dollars," says Smith, "and it makes China's $2.85 Trillion foreign currency reserve worth a lot less."

* "The Labor Department says the Consumer Price Index rose 0.5 percent in December, the largest increase in 18 months. About 80 percent of the increase was due to an 8.5 percent rise in the gasoline index, also the sharpest increase in 18 months. Food prices ticked up 0.1 percent in December," reports CNBC. Note: Wholesale prices (PPI) jumped 1.1% in December, that's 12% annualized.

* New Move to Make Yuan a Global Currency: "China has launched trading in its currency in the U.S. for the first time, an explicit endorsement by Beijing of the fast-growing market in the yuan and a significant step in the country's plan to foster global trading in its currency. Bank of China limits the amount of yuan that can be converted by a U.S.-based individual customer to up to $4,000 a day. The restriction is designed to fend off speculation in the currency, bank officials say. Some analysts have predicted that it will be only a few years before 20% to 30% of China's $2.3 trillion in imports could be conducted in yuan rather than dollars. Some industry observers have called yuan trading outside mainland China a game-changer," reports WSJ.